TaxTMI 
TaxTMI 
2025 (11) TMI 563
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....eals under consideration. 3. ITA No 1409/M/2024 In the instant case, the Assessee had shown loss of Rs. (-) 9,03,171/- by filing its return of income for the assessment year under consideration on dated 25/09/2012, which was initially processed by the CPC u/sec. 143(1) of the Act and subsequently, selected for scrutiny under CASS. Accordingly, statutory notices dated 09/08/2013 u/sec. 143(2) and 07/08/2014 and 30/09/2014 u/s 142 (1) of the Act, along with questionnaire were issued to the Assessee, whereby, Assessee was asked to furnish the required details for completion of assessment proceedings. 4. In response to the statutory notices issued, the Assessee from time to time attended the assessment proceedings and filed certain details. 5. The Assessing Officer (AO) thus on perusing the details filed by the Assessee, observed "that the Assessee is engaged in the business of construction and from the accounts and tax audited report of the Assessee, it appears that the Assessee had taken unsecured loan of Rs. 37,13,24,958/- from various parties" and therefore in order to verify the transactions, asked the Assessee to prove the creditworthiness and genuineness of the parti....
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....onsidered the loan confirmations of unsecured loans provided by the Assessee vide letter dated 20/03/2015 and noticed that Assessee has filed confirmation letters in respect of few parties but without supporting documents, such as, ledger account, copy of return of income, balance sheet, profit and loss account etc. In absence of these supporting documents, genuineness and creditworthiness of the parties could not be verified. The AO further observed that despite of affording several opportunities to the Assessee, it has neither filed any supporting documents nor cogent explanation, in respect of the following parties: - Sr. No. Name of the party Amount (in Rs. ) 1 Aksha Realty Ltd. 47,308 2 B. Chandan 11,00,000 3 Dev Jewels 10,26,85,000 4 Dinesh Parmar 10,00,000 5 Girdhai Jain Sanghvi 23,44,000 6 G.J. Jalshinghani 10,00,000 7 Javed Raza Shroff 55,00,000 8 Kalawati P. Kothari 21,00,000 9 Mukesh Mehta 5,00,000 10 Sancheti and Sons 2,50,000 11 Satish Goyal (HUF) 15,00,000 12 Lalit Mehta and Associates 18,00,000 Total 11,98,26,308 9.1 The AO, therefor....
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....e or at the time of hearing" 13. Ground of appeal no.1, relates to deletion of addition/ disallowance of Rs. 1,30,40,000/- by the Ld. Commissioner. From the accounts of the Assessee and tax audit report, it was observed by the AO that the Assessee has taken unsecured loan of Rs. 37,13,24,958/- from various parties, however, the Assessee has given details of Rs. 35,82,84,958/- only and, therefore, AO made the addition of Rs. 1,30,40,000/- being difference between the amount shown in the books of accounts and as per the details given by the Assessee, and added back to the total income of the Assessee. 14. The Assessee in appeal before the Ld. Commissioner, has claimed that as per its books of accounts (balance sheet as on 31/03/2012) during the year under consideration, the Assessee had taken unsecured loan of Rs. 34,32,14,958/- (Rs. 37,13,24,958 closing balance as on 31/03/2012 - Rs. 2,81,10,000 opening balance as on 31/03/2022) and in order to substantiate the genuineness of such loan amount, has duly submitted all relevant details along with documentary evidence, which somehow sidelined by the Ld.AO. 15. The Ld. Commissioner on perusing the records, duly recognized the af....
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.... Bharati B Mehta 2,50,000 3 Chokasi Arun Ganesh 2,00,000 4 Rajesh Amrutlal Jain 4,00,000 5 Rakhi Kapil 2,00,000 6 Shashikala Jain 10,00,000 7 Shree Ramashree Constructions Pvt. Ltd. 50,00,000 8 Swarn Shilchins and Jewellery Pvt. Ltd. 33,44,000 9 Varghrecha Kamlesh 2,00,000 10 Vinod G. Jain 5,00,000 11 A.H. Pokharana Jewellery 15,00,000 12 Asiya Idris Shaikh 25,00,000 13 Sanjay Shantilal 15,00,000 Total 1,68,44,000 18. The Assessee before the Ld. Commissioner has claimed that in order to prove identity, genuineness and creditworthiness of the parties, has provided details of loan amounts taken, list of parties containing 26 names with the addresses, their PAN nos., AO's jurisdictions, ITR acknowledgments, ledger account and bank account statements highlighting loan amounts taken. The Assessee also claimed that details of all 13 parties, which were in question before the Ld.AO, were very much in the list of 26 names, as appears from the list reproduced herein below: - Sr. No. Name of parties PAN Documentary evidence Page No Amount of loan taken ....
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....Confirmation account 3. ITR acknowledgment 4. Bank statement 125-35 14,48,20,650 16 Aksha Realty (KBJ Hotel Varanasi Ltd.) AADCK6060G 1. Ledger account 2. Confirmation account 3. ITR acknowledgment 4. Bank statement 136-38 47,308 17 B. Chandan & Co (Manikumari Chandanmal Jain) AFQPJ4084E 1. Ledger account 2. Confirmation account 3. ITR acknowledgment 4. Bank statement 139-42 11,00,000 18 Dev Jewels (Dev Gupta) AYXPG4410F 1. Ledger account 2. Confirmation account 3. ITR acknowledgment 4. Bank statement 143-50 10,26,85,000 19 Dinesh Parmar (HUF) AAAHD3898M 1. Ledger account 2. Confirmation account 3. ITR acknowledgment 4. Bank statement 151-55 10,00,000 20 Girdhar Jaisinghani AEBDJ3229F 1. Ledger account 2. Confirmation account 3. ITR acknowledgment 4. Bank statement 156-61 33,44,000 21 Javed Raza Shroff AACPS9026N 1. Ledger account 2. Confirmation account 3. ITR acknowledgment 4. Bank statement 162-66 55,00,000 22 Kalawati P Kothari AAGPK2831H 1. Ledger account 2. Confirmation account 3. ....
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....er in Assessee's appeal. We also by independently verifying the aforesaid facts and circumstances, and documents, found that the decision of the Ld. Commissioner in deleting the addition under consideration, is not only based on the relevant documents submitted by the Assessee in order to discharge its prima facie onus casted u/sec. 68 of the Act, but also based on the independent verification by himself on the factual aspects and on the logical reasoning and material available on record and thorough examination of the details and documents, specifically, to the effect that the Assessee had duly provided the details of 13 parties by producing the details such as, ledger accounts, confirmation accounts, ITR acknowledgments and bank statements etc. Thus, the decision of the Ld. Commissioner in deletion of addition of Rs. 1,63,44,000/- in our considered view is correct and logical based on documents and plausible reasonings and therefore the same is sustained. 21. We further observe that AO also made the addition of Rs. 21,48,20,650/- mainly on the reason that the notices u/sec. 133(6) of the Act, sent to the following parties namely (i) Pilot Constructions Pvt. Ltd. (Rs. 7,00,0....
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....onfirmations from these two parties. Further the creditworthiness of these two parties have not been doubted. For the instant AY i.e., AY 2012-13, applicable provisions of section 68 require the appellant to explain satisfactorily the nature and source of the credits in the books. In my opinion, the appellant has explained the nature and source with supporting documentary evidence. It is only from FY 2013-14, legal mandate for enquiring into the source of source of credits is introduced in the Act (vide Finance Act, 2012 w.e.f. 01.04.2013). Therefore, for the AY in question the appellant not legally bound to explain the source of the source. Lack of statutory provision mandate ties the hands of the IT authority from making enquiries on the same." 23. The Ld. Commissioner thoroughly considered the aforesaid submissions of the Assessee and examined the details filed, and ultimately came to a conclusion that Assessee has explained the nature and source of transactions with supporting documentary evidence and legal mandate for enquiring into the source of credits as introduced in the Act vide Finance Act, 2012 w.e.f. 01/04/2013 applicable from FY 2013-14 onwards, therefore,....
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....he Act. The Assessee by producing PAN nos. and ITR acknowledgments, has duly proved the identity of the parties. Further, by producing ledger account, loan confirmations and bank statements highlighting the amount of loans taken and copy of ITRs along with annual financial statements of the Assessee as well as lenders/creditors, demonstrated and/or established the genuineness of the transactions and the creditworthiness of the parties. Admittedly, in the assessment year under consideration, the Assessee was not supposed to establish the source of source, as has rightly been held by the Ld. Commissioner, as the amendment in the provision of section 68 of the Act, came into effect from 01/04/2013 and made applicable from A.Y. 2013-14 onwards as per Finance Act, 2012, and therefore the same is not to be applied for previous years. 26.1 The decision of ld. Commissioner in holding so that proviso to the section 68 of the Act introduced vide Finance Act, 2012 has to be made applicable w.e.f 01/04/2013 and from A.Y. 2013-14 onwards, as affirmed by us, is fortified with the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. Gagandeep Infrastructure (P.) Ltd. [2017]....
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....x Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. (f) In the above circumstances and particularly in view of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained." 27. We observe that with regard to this issue, whether non-serving the notices u/sec. 133(6) of the Act, would entail making the addition u/sec. 68 of the Act or not, there is plenty of judgments and thus for brevity and ready reference, we are quoting few, which are as under: 27.1 The Hon'ble Apex Court in the case of Commissioner of Income Tax, Odisha Vs. Odisha Corporation Pvt. Ltd. (1986) 159 ITR 79 (SC) has also dealt with an identical issue, wherein the Revenue apart from issuing the notices u/s 131 to the creditors, did not pursue the matter further and therefore the Hon'ble Apex Court affirmed the decision of the Hon'ble High Court in affirming the conclusion of the Tribunal to the effect that the A....
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....application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case. 7. Considering the above, no substantial question of law arises. The appeal stands dismissed. However, there is no order as to costs." 27.3 Further, the Hon'ble Jurisdictional High Court in the case of Creative World Telefilm Ltd. (2011) 15 taxmann.com 183 also dealt with the identical issue, wherein the summons sent to the creditors were ultimately returned back with an endorsement "not traceable", whereas the Assessee by filing relevant document discharged its onus casted and the Hon'ble High Court in that eventuality affirmed the decision of the Tribunal in deleting the addition by following the judgment o....
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....of summons sent to the creditors with an endorsement 'left/ not known' would not entail making the additions, where the Assessee by filing relevant document, has specifically discharged its onus casted u/s 68 of the Act. 28.1 We observe that even summons u/s 131 of the Act at the address given were issued after a considerable long time and it cannot be ruled out that the companies may have changed their addresses and thus, non-serving the summons at the address given cannot be fatal and therefore would not ipso-facto entail making the addition, specifically in view of decision of Hon'ble Delhi High Court to the effect "that just because the creditors/share applicants could not be found at the address given, it would not give the revenue the right to invoke section 68. One must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace a person". Thus, on the aforesaid analyzations, we are of the considered view that the addition made by the AO, simply on the reason that notices sent to the 02 lenders/creditors were returned back unserved with the postal remarks 'left/not known', without taking any further action and making enquiry d....
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....n/onus casted with reference to the genuineness of the transaction by filing necessary evidences, but still the AO made the addition, without applying his mind to the aforesaid documents. 31. We observe from the impugned order that the Ld. Commissioner thoroughly examined the issue, as well as list of 26 persons submitted by the Assessee and thus categorically held that in all these 12 cases, the Assessee has filed confirmations from the parties concerned and all these transactions are routed through banking channel, which are duly reflected in the books, therefore, the genuineness of the transactions also stands established, except in cases persons namely, Mr. B. Chandan, who has given Rs. 11.00 lac as unsecured loan and Mr. Girdhai Jain Sanghvi, who has given Rs. 23.44 Lac and Mr. G.J. Jaisanghani, who has given Rs. 10.00 Lac. 32. We have given thoughtful consideration to the peculiar facts and circumstances, again in respect of addition of Rs. 11,98,26,308/- and observe that the Assessee in order to discharge its prima-facie onus, has submitted all the relevant details and documents and thus satisfied the conditions enshrined in section 68 of the Act and therefore, Ld. Com....
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.... u/s 68 of the Act, which is parimateria to the addition made qua loan u/s 68 of the Act, where the Hon'ble Apex Court has clearly laid down " that if share application money is received by the Assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but the share money cannot be regarded as undisclosed income u/sec. 68 of the Act". 35.1 The Hon'ble Apex Court in the case of Orissa Corporation (P.) Ltd. (supra) has also held as under: - "13................................., if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." 35.2 The Hon'ble Jurisdictional High Court in the case of Gaurav Triyugi Singh Vs. Income Tax Officer-24(3)(1), Mumbai [2020] 423 ITR 531 (Bombay) has also categorically held as under: "From a reading of section 68, as extracted abo....
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.... also considered the ingredients of section 68 of the Act as applicable prior to AY 2013-14 and held that the Assessee is only required to explain the source of credit. There is no requirement under law to explain the source of source. 35.4 Even otherwise a bare reading of section 68, would make it clear that if any sum is found credited in the books of an assessee maintained from any previous year, and the Assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, then the sum so credited may be charged to income-tax, as the income of the assessee of the relevant previous year. Thus, it is necessary for an Assessee to prove the prima facie transaction, which resulted into a cash credit in his books of account. Such proof would include, proof of identity of the creditor, capacity of such creditor to advance the money and lastly, genuineness of the transaction. Thus, in order to establish receipt of credit in cash, we reiterate that as per requirement of section 68, the Assessee has to explain or satisfy three conditions, namely: (i) identity of the creditor; (ii) genuineness ....
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....urchase of property. 3. Copy of relevant page of Balance Sheet as 31.03.2009, 2010 and 2011. 4. Copy of sale agreement dated 25.05.2011. 5. Copy of ledger account along with bank statement highlighting amount of payment received on account of sale of property. 6. Copy of relevant page of Balance Sheet as on 31.03.2012 along with summary of inventory." 37. The Assessee further claimed that the property was purchased on a consideration of Rs. 51.00 Lac on 10/11/2008 and sold the same for a consideration of Rs. 54.00 Lac on 02/05/2011. Further perusing the audited books of account for the A.Ys. 2010-11 to 2012-13 and summary of stock, it can be observed that Assessee has recorded the said property in the audited books of accounts as 'inventory' and has also considered the receipt of payment, as recorded in the books of accounts, while filing return of income, as per the provisions of the Act and, therefore, the action of the AO, is without application of mind and consequently the addition of Rs. 1,92,86,000/- is liable to be deleted. 38. We observe that Ld. Commissioner by thoroughly examining the issue under consideration and the relevant doc....
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.... the Ld. DR by submitting that the Assessee has duly filed the documents and also demonstrated that it has shown the consideration of Rs. 54.00 Lac in the audited books of accounts and, therefore, it cannot be said that the Assessee has not offered the said amount for taxation. 41. We have considered the determinations made by the Authorities below and rival claims of the parties on the issue under consideration and given thoughtful consideration to the peculiar facts and circumstances of the case. Admittedly, the Assessee before the Authorities Below as well as before us, has duly filed aforesaid documents, which are sufficient to establish the genuineness of the claim. Further, the Assessee by producing the relevant pages of balance sheets, as on 31/3/2009, 31/03/2010, 31/03/2011 & 31/03/2012 along with summary of "inventory" and "sale of stock", has duly demonstrated that it has duly disclosed the amount of consideration received by it. It is also a fact that Ld. Commissioner thoroughly examined the documents as well as facts independently by applying his independent mind and even otherwise, upheld the addition to the extent of Rs. 3.00 Lac by considering the peculiar facts a....
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....e instrument No. 945604, MICR outward clearing. Further in the chart containing the details/summary of unsecure loans, the Assessee has specifically mentioned about the documentary evidences filed i.e. ledger account, confirmation account, ITR acknowledgment and bank statement and therefore, addition as confirmed by the Ld. Commissioner, is un-sustainable. However, we observe from the bank statement of Union Bank of India, that though a credit entry of Rs. 2,50,000/- through instrument vide instrument No. 945604, MICR outward clearing dated 27/03/2012 is appearing, however the balance amount as on 27/03/2012 after credit entry, is still depicting low, in comparison to previous date, thus this fact requires verification by the Jurisdictional Assessing Officer. Hence on the aforesaid reasons, the Jurisdictional AO is directed to delete the addition, after verifying the credit entry of Rs. 2,50,000/- from Bank statements etc.. 46. Coming to the addition of Rs. 2,50,000/- in respect of Mr. Bharati B Mehta (correct name Chirag Vinodraj Mehta), Ld. Commissioner affirmed the addition made by the AO mainly on the reason that in the bank statement of Union Bank of India (A/c No. 31980101....
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.... this fact requires verification by the Jurisdictional Assessing Officer. Hence on the aforesaid reasons, the Jurisdictional AO is directed to delete the addition, after verifying the credit entry of Rs. 2,50,000/- from Bank statements etc.. 47. Coming to the 3rd addition of Rs. 11,00,000/- on account of unsecured loan taken from B. Chandan, we observe that Ld. Commissioner by holding that though the Assessee has furnished confirmation of bank proof, but creditworthiness of B. Chandan left unproved. We observe that the Assessee by submitting relevant documents i.e. page nos. 139 to 142, which are the ledger account of the Assessee, depicting receipt of Rs. 11,00,000/- from B. Chandan & Co, bank statement crediting the amount of Rs. 11,00,000/- on dated 10/01/2012, ITR acknowledgment depicting PAN no., address and details of jurisdictional AO, has established the identity and creditworthiness of the lender party and genuineness of the said loan amount and therefore, in our considered view, the Assessee has duly discharged its onus casted u/sec. 68 of the Act. Thus, on this aspect as well, no addition is warranted and, therefore, the addition of Rs. 11,00,000/- on account of unsec....